Independent \t\t\t\t\t Investor eBook<\/a><\/strong>.<\/p>\n————-<\/p>\n
Large banks and more recently pension funds have suddenly become infatuated with gold.\u00a0 They chant the mantras that \t\t\t\t\t gold bugs have known for years: gold is a store of value; owning gold is financial insurance; an ounce of \t\t\t\t\t gold will always buy a good suit.\u00a0 The idea is that if the economy continues to weaken and share prices decline, a \t\t\t\t\t strategic allocation of the precious metal will hedge and offset some of the losses in the financial sector.<\/p>\n
On the surface it seems to make sense and it\u2019s hard to argue with the logic.\u00a0 Even so, logic can sometimes \t\t\t\t\t get twisted, whereas facts cannot.\u00a0 The evidence is found in the chart we describe as \u201cAll the Same Market.\u201d Gold, \t\t\t\t\t stocks, currencies (versus the dollar), oil, grains, meats, softs, all decline in a deflationary environment.\u00a0 As \t\t\t\t\t liquidity dries up and credit contracts, people, businesses, and institutions sell everything to get dollars.\u00a0 Cash \t\t\t\t\t is once again king.\u00a0 This is bearish for gold.<\/p>\n
Looked at another way:\u00a0 as the dollar advances from its lows, things denominated in dollars lose value against \t\t\t\t\t the dollar.\u00a0 As long as the dollar remains the global senior currency, assets will depreciate:\u00a0 not just stocks \t\t\t\t\t and commodities but residential and commercial property, works of art, collectible cars, pretty much everything.\u00a0 Of \t\t\t\t\t course, this outlook presumes a deflationary environment and that\u2019s been our view for quite some time.\u00a0 But \t\t\t\t\t that\u2019s \t\t\t\t\t another conversation.\u00a0 The topic here is stocks down\/gold up – or not.<\/p>\n
The long-time editor of the Elliott Wave Financial \t\t\t\t\t Forecast Short Term Update, Steven Hochberg summed it up succinctly in a recent issue:<\/p>\n
\u201cThe other important aspect to a dollar bottom is the implication to all the other markets that have been moving opposite to this senior currency. The start of a major dollar rally should roughly coincide with a turn down in stocks, commodities, oil and the precious metals. So there are likely to be important trend reversals across nearly all major markets.\u201d<\/p>\n
Don\u2019t fall into the trap of group-think.\u00a0 If investing was that easy we\u2019d all \t\t\t\t\t have (insert your own private fantasy).<\/p>\n
————-<\/p>\n
For more information, download Robert Prechter\u2019s free Independent \t\t\t\t\t Investor eBook<\/a><\/strong>. The 118-page resource teaches investors to think independently by challenging conventional financial \t\t\t\t market assumptions.<\/p>\n","protected":false},"excerpt":{"rendered":"By Jeff Reckseit – Large banks and more recently pension funds have suddenly become infatuated with gold. They chant the mantras that gold bugs have…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-4866","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/4866","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=4866"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/4866\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=4866"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=4866"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=4866"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}